This blog post originally appeared on the Center for Global Development Global Health Policy blog.

Maurice Hilleman may have saved more lives than any other scientist

Maurice Hilleman may have saved more lives than any other scientist.  He developed eight of the vaccines widely used around the world:  for measles, mumps, hepatitis A, hepatitis B, chickenpox, meningitis, pneumonia and HiB. Hilleman worked throughout his career at Merck, a pharmaceutical company.

Last week, donors pledged $4.3 billion to GAVI to help immunize 250 million children by 2015.  Most of this money (over 80%) will come from four donors: the UK ($1.3 billion), the Gates Foundation ($1 billion), Norway ($677 million) and the US ($450 million).    Other donors also generously doubled their previous commitments, and Japan and Brazil gave for the first time.

We should heap praise on donors for this. Childhood vaccination is among the most successful and cost-effective development interventions (pdf).  When the Expanded Programme on Immunization (EPI) was launched in 1974, less than five per cent of the world’s children were immunized during their first year of life. Today, about 80% of children receive the basic package of six life-saving vaccinations (polio, diphtheria, tuberculosis, whooping cough, measles and tetanus), saving about 3 million lives a year.

And what a difference it has made.  Smallpox has been eradicated. Polio may be next.  The number of children dying of measles has declined by about 80% from 733,000 deaths in 2000, to 164,000 in 2008.  It is easy to become complacent about success on this scale.  Now that many fewer children die of these diseases, we are in danger of forgetting that they were ever a problem, and the role that vaccination has played in ridding us of them.

We have not only the medical technology, but also the health systems, skills and logistics to reach children across most of the developing world. So we could also reach children with vaccines which are still considered too new or too expensive to be widely used in developing countries, including those against pneumococcal disease, rotavirus, meningitis,  hepatitis B, yellow fever, cervical cancer, rubella, typhoid, and Japanese encephalitis.

Backing vaccination with big money is an astute political move. Taxpayers understand the idea that every child should have the same vaccines as their own children; and vaccination programs clearly work.

This is not just good politics: it is good development policy too. DFID recently conducted an exhaustive review of the value for money for the taxpayer from 43 multilateral organisations.  GAVI was one of the top-rated organisations, along with UNICEF and the Global Fund.  Vaccination is one of the most reliably cost effective, life changing development interventions that money can buy.  It ought to be a no-brainer.

Save the Children UK and ONE both ran impressive campaigns supporting a large GAVI replenishment, and the new donor commitments were welcomed across most of the mainstream development community.  But a small number groups – notably Médecins Sans Frontières and Oxfam – have criticized the way that GAVI works.  (For example, Daniel Berman from MSF appeared on Newsnight to criticize GAVI).

These groups are clear that they support the objective of greater access to vaccination; but they say that donors could make better use of the aid budgets by by pushing pharmaceutical companies for lower prices. They have accused GAVI of having too cozy a relationship with drug companies, which have two representatives on GAVI’s 27-person board.

Getting a better deal

MSF and Oxfam are certainly right that lower prices would mean that a given vaccine budget could go further: we could immunize more children, and so save more lives.  If we think vaccination is important for development, we should do whatever we can to make it as widely available as possible. Oxfam and MSF say they want GAVI to take three steps:

first, full transparency about the prices GAVI pays; second, forceful action by GAVI to use competition to get a better deal; third, all pharmaceutical companies should step down from the GAVI Board because of their clear conflict of interest.

I have no argument with the first objective, and I’m glad to see that UNICEF has announced that it will be publishing vaccine prices on its website.

But the other two objectives (getting ‘a better deal’, and removing pharmaceutical companies from the GAVI board) are seem to me to be potentially reckless.

There are, in principle, two kinds of ways to cut prices.  One way is to reduce the cost of developing and producing new vaccines.  These include simplifying regulations, shifting production to lower-cost places, and reducing or diversifying risk.  The second way to cut prices is to squeeze producers, and so get a better deal for purchasers by reducing the profits of the pharmaceutical companies.  We might be able to do this, for example, by using the market power of UNICEF (which purchases vaccines on GAVI’s behalf) to push prices down, or by bringing more suppliers into the market so that competitive pressures make it harder for any firm to make big profits.

The first kind of price reduction – reducing costs – is a net benefit to society (other things being equal).  If we can do it, we should.  There is a big and important agenda to pursue here.  Long term commitments to GAVI, enabling long term contracts with pharmaceutical companies, are an important way to bring down the costs of production.  GAVI can play an important role, and I would argue (indeed,I have argued) they should be doing it more.   Amanda Glassman and colleagues set out a great agenda on this in a recent working paper.

The second kind of price reduction – transferring surplus from producers to consumers – is a zero sum transfer from the shareholders in pharmaceutical companies to governments and aid agencies.  That may be desirable on distributional grounds but it may have long-term consequences which we come to regret.

We want pharmaceutical companies to develop new vaccines, and to improve existing vaccines.  For diseases which hardly ever affect rich countries – like malaria – we want them to go ahead and develop the vaccine anyway.  And when they invent a new vaccine for diseases which affect people everywhere, we want them to trial those new vaccines in poor country settings as well as industrialised countries and, if they work, to invest in manufacturing capacity to produce the millions of doses needed to vaccinate people  across the developing world.

So this is the dilemma: we want pharmaceutical companies to invest more in developing and producing new vaccines and drugs for developing companies.  But once they’ve done so, we want those products to be available at the lowest possible price, ideally free.

Be careful what you wish for

In simple economic models, we don’t need to think too hard about protecting the interests of companies. We encourage competitive markets, and let competition drive the price down to the marginal cost.  That enables firms to make a reasonable return on their capital, leaving the rest of the surplus in the hands of the consumer.

But drugs and vaccines are different in a crucially important way.  They are characterised by massive up-front costs of research, development and testing, and relatively low costs of production once the vaccine has been approved.  These products are only profitable if the companies have some way to recover their up-front development costs.

So what should the price be?  If the price is forced down to marginal cost – as it would be in unrestricted competition – the firm which has developed the product will never recover the costs of its investments.  If we want the firm to consider doing this again (or indeed to consider doing it in the first place) then the price paid to the firm has to stay above marginal cost, at least for a time, so that the firm gets its money back.

An imperfect answer to this has been the patent system: to grant the firm a temporary monopoly so that it can keep the price above marginal cost and recover those development costs.  But this way of paying development costs has huge disadvantages: namely that charging higher prices excludes some consumers from the product. That may not be a problem if the product is an MP3 song or a computer game, but it is a helluva  price to pay when the product is a life-saving vaccine.

The other potential problem with paying above marginal cost is that firms may be able to make excess profits. We want firms to be able to cover their costs, and reward their shareholders for the risk they have taken, but we don’t want them to hold society to ransom if they have invented a life-saving drug or vaccine.

So we want a mechanism which gives firms a reasonable return on their investment but which does not allow them to make excessive profits.  That in turn means neither allowing competition to force the price down to marginal cost, nor allowing firms to charge inflated prices.

Achieving both access and innovation

Oxfam and MSF want to see more manufacturing by producers in developing countries, as a way to bring the price down.  Such a move has two effects: one good and one iffy.  Moving production to lower-cost locations may bring down the total cost of production: that must be good.  But companies  are not going to invest in future vaccines if they know that they will be undercut by manufacturers making copies of the new product, having borne none of the development costs.  So untrammeled competition may be good in the short run, if it brings down prices, but bad in the longer term if it chokes off future investment in these products.

The analysis of the vaccine market by Oxfam and MSF alleges that prices are too high.  The entire policy agenda rests on the judgement , so it is unfortunate that the report offers no evidence to support it.  All the report tells us is that ‘actual prices are not determined in a simple way by, or justified by, R&D costs’.

Just because Oxfam and MSF offer no evidence for their claim doesn’t mean that they are wrong.  Perhaps we are paying too much for these vaccines, and the companies are making excessive profits in these markets.  After all, a lot of other business are making a lot of money out of the aid industry.  It is hard to tell, because these companies are extremely secretive about the actual costs of development and production (in a way that I find rather sinister and which certainly does not help their cause).  I have no difficulty believing that many pharmaceutical companies would be trying to make profits from developing countries if they could.

Here’s why I don’t think that is very likely that they are.  We don’t see firms lining up to develop new products to tackle the health problems of people in developing countries. We don’t see them rushing new products to market in developing countries.   We don’t see them investing in the adaptation of existing products, or in the investment of large scale plant needed for large scale production.  On the contrary: over the decades before GAVI was established, we saw fewer and fewer firms seriously engaged in medicines for developing countries.  If firms are making huge profits on selling drugs and vaccines for developing countries, why isn’t there a gold rush?

That isn’t a very satisfactory basis for a judgement. But let’s consider the balance of risks.  If I’m wrong, and we are overpaying for vaccines, the damage is that some of the aid budgets of rich countries is unnecessarily bloating the coffers of Big Pharma.  But vaccines are a hugely cost-effective development intervention: even if we were paying twice as much as we should for them, they would still be saving lives more cheaply than almost anything else we do. And as news spreads of the handsome profits to be made, more firms and investors would be attracted into developing, manufacturing, registering and selling new products for developing countries. But if Oxfam and MSF are wrong, then driving down the returns to pharmaceutical companies will reduce their interest in these markets.  There will be less research; less investment in large-scale production; and products will be brought to markets more slowly. The consequence will be that millions of people will be denied access to life-saving products.   Given that we can never get the prices exactly right, I’d rather err on the side of making these markets too congenial for pharmaceutical companies, and so attract more businesses to the field, than making the environment too hostile for them and driving them away.

The MSF and Oxfam paper implies that they believe that prices should be pushed down to the lowest possible level, because this will increase access. If that is their view, they do not tell us how firms will be encouraged to engage in these markets in future; if that is not their view, they offer no insights into how they would prevent the price from falling too far or how we would know when we’ve got there.

The value of partnership

One way to achieve a combination of innovation and investment (requiring higher revenues for firms) with access for the citizens of poor countries (requiring lower prices paid by purchasers) is to use aid budgets to make up the difference.   GAVI has a huge role to play in making this happen. Making developing country markets more valuable for private investment is a legitimate, high-value use of aid.  But we put those benefits at risk if we have appear to have ideological objections to using aid to support good returns for pharmaceutical companies when they engage in developing countries.  That is why I’m concerned about the recommendation that the pharmaceutical industry should be kicked off the GAVI board.  Max Lawson of Oxfam calls this the ‘thorniest issue’.

GAVI was established as an alliance of governments, international organisations, donors, research organisations, firms and civil society working together to increase access to vaccinations.  The 27-seat board has one seat for an industrialised country firm, and one for a developing country firm.   Those firms are hardly over-represented: there are ten government seats.  Civil society also has one seat – exactly as many as rich country pharmaceutical firms.  Every member of the board has a profound interest in the decisions of the alliance – sometimes a shared interest with the other stakeholders, sometimes competing interests.

The benefit of having pharmaceutical companies engage in the alliance is obvious: they understand the economics of their industry better than anyone else. If we want to figure out what we need to do to get more vaccines produced for and distributed in developing countries, we have to work closely with the firms who do it.

That model is yielding benefits.  Vaccines against pneumococcal infections have been rolled out much more quickly in developing countries, not long after they became available in industrialised countries, in stark contrast to the 15 year delay in the roll-out of previous vaccines for HiB and Hepatitis B.  GAVI has brought together governments and firms to bring down the price of rotavirus vaccine for developing countries.

MSF and Oxfam are not entirely explicit about what they see as the main risk of industry participation but their main concern seems to be that firms have somehow overcome their numerical inferiority to capture the GAVI board, leading it to collude to pay too much for vaccines. If that were true, it would indeed be a matter for concern.  But it depends again on their view that prices are too high.

Given their concern to bring down prices, and ensure access in the least developed countries, MSF and Oxfam could speak out more energetically against  PAHO’s  ’most favored nations’ clause which prevents vaccine companies from charging least developed countries a lower price than they charge in wealthier middle income countries like Brazil.  Yet the NGOs seem strangely reluctant to take this on.  Perhaps attacking the pharmaceutical industry is easier, if lazier, than challenging the policies of governments of emerging markets?

Let’s show some love to Big Pharma

My colleague Charles Kenny has shown that over the last century there have been massive improvements in the length and quality of life even in countries whose incomes have hardly changed. Countries with GDP per person of $300 in 1999 have approximately the same life expectancy (46 years) as people had in 1870 in a country with an income ten times as great. Charles lists five countries in which incomes fell by an average of 18 percent over forty years, yet life expectancies increased in all of them over the same period, by an average of 40 percent.  How has this happened?  In large part as a result of the development and use of vaccines, drugs and contraceptives.

Development of new medicines has almost always depended on a combination of public and private investment.  As we know from the story of Maurice Hilleman, many of the most important breakthroughs have come from scientists working in pharmaceutical firms.

Chart showing how the relationship between infant mortality and income has changed over the last century

There is plenty of reason to maintain a healthy suspicion of pharmaceutical companies. There are plausible allegations of unethical clinical trials, misrepresentation of data, irresponsible marketing and corruption. I find the industry’s obsessive secrecy sinister.  I don’t like the industry’s zealous protection of intellectual property rights, which inhibits the spread of ideas and society’s technological progress.  I share the widespread suspicion of companies that are too big, too rich and too powerful.   I’m sure that many pharmaceutical companies would be happy to gouge the market if they were given the opportunity to do so.   Nonetheless, it is a shame that an industry which has done so much good for humanity – including in developing countries – is so widely vilified.

We have seen massive improvements in health in the last fifty years, far outperforming growth in incomes, as a result of new vaccines and drugs mainly brought to us by private pharmaceutical companies, on a platform of scientific research conducted in or funded by the public sector. You could make a pretty compelling case that the pharmaceutical industry has done more than the aid industry to improve the lives of poor people.

Conclusion

The decision last week by a group of donors to put a lot of money into GAVI to pay for vaccination was one of the very smartest, most humane decisions they could have taken.  They have been generously praised from many quarters, and rightly so.

A combination of publicly-funded research and the market-driven engagement of pharmaceutical companies has resulted in the development and production of vaccines and drugs which have had a huge, positive impact on people’s lives in both rich and poor countries.  We don’t want firms to be making excessive profits, least of all out of the aid budget.  But I see no signs that this is what is happening.  If anything, the opposite seems to be true.  Over the years, partly out of an abundance of concern to increase access by keeping prices down, we’ve made things tough for firms wanting to sell to developing country markets. The result: not enough vaccines and drugs for diseases which mainly affect people in poor countries, and too slow a roll-out of new products.  If we want to reverse that, we should be trying to make these markets more profitable.

Of course it is important to bring down the price paid by developing country governments, to prevent high prices from excluding poor people from access to these life-saving products.  We should do everything we can to bring down costs – including looking again at how we can cut the regulatory burden, take advantage of low cost production, and reduce uncertainty.   But we should be very cautious about driving down prices merely by squeezing pharmaceutical companies harder. We have to weigh our pleasure from poking the rich and powerful in the eye against the enormous damage we will cause if we drive firms out of these markets. A much smarter if less satisfying approach is to use aid budgets to bridge the gap between reasonable returns to the pharmaceutical industry and prices that the developing world can afford.

Declaration of (non) interest:  neither I nor any programme on which I work is funded, or has ever been funded, by the pharmaceutical industry.

Would you spend it on stopping the slash-and-burn of forests?  Perhaps on switching to nuclear energy?   More energy-efficient buildings?  Building cleaner power stations?

According to a recent paper by David Wheeler and Dan Hammer, climate change experts at the Center for Global Development, the answer is (drum roll): you would do much, much better to spend your money on a combination of family planning and girls’ education in developing countries.

This table, based on data in their paper, shows how many tonnes of CO2 would be abated for your $1m:

The logic, of course, is that if there are fewer people on the planet, then we will generate fewer greenhouse gas emissions.  Population policies are important because there are many people in developing countries who want smaller families, but don’t have access to the family planning services they need to achieve this.  Education is important because educated girls want (and are more able to insist on) smaller families.  That’s why these interventions are important and cost effective, both individually and especially when done together.

Win – win

This approach is particularly attractive because, in addition to helping to slow global warming, there are other, very significant benefits for the citizens of developing countries of access to family planning and to education for girls.

The other day I reported here that if donors invested about $180 million a year to provide modern contraception to every Ethiopian woman who wants it, this could set off a virtuous circle of rising income per capita, lower desired family size, greater use of contraception, lower numbers of children, and so rising income per capita.  My back of an envelope calculation found that a decade of access to modern family planning would have roughly the same effect on incomes in Ethiopia as the entire international aid programme in Ethiopia does today.

As well as environmental and economic benefits, there are important social and health benefits for women and their families, which strengthen the case for these investments over and above the cost-effectiveness figures shown above.

Making choices

Of course in an ideal world we would do all of these things.  But although it is inconvenient to acknowledge it when you are busy trying to save the world, resources for averting climate change are limited. We should make informed choices to reduce carbon emissions in the most cost-effective and sustainable way we can with the resources available, to secure the biggest and broadest benefits.   These figures from the Center for Global Development imply that investment in family planning and girls’ education would be a far better investment than the UN Reducing Emissions from Deforestation and Forest Degradation (REDD), which aims to spend $30 billion a year on incentives for developing countries to reduce deforestation and forest degradation.

We would get three or four times as much bang for our buck – in terms of climate change benefits – from population policies and girls’ education as we would from even the most cost-effective investments in forestry (stopping slash-and-burn), and in addition we’d get the broader economic and social benefits for the people of developing countries.

So why isn’t this, in fact, where we are spending the climate change money?  Something to do with the power of industry in the environmental lobby? (Update: See Eliot’s comment below)

(The figures in the table above are calculated from Table 2 and and Table 5 of The Economics of Population Policy for Carbon Emissions Reduction in Developing Countries, David Wheeler and Dan Hammer, Center for Global Development Working Paper 229)

The foot of a person suffering from podoconiosis

I bet you are thinking: podo-what?

Podoconiosis is a disease of people who work barefoot, particularly on red clay soil in the neighborhood of volcanoes, especially at altitude. Tiny micro particles of silica from the volcanic soil penetrate the skin and inflame the lymphatic system. (As a layperson, I think of podoconiosis being to feet what asbestosis is to lungs.)

This disease affects millions of people around the world, including in Ethiopia, Rwanda, Burundi, Cameroon, Tanzania, Equatorial Guinea,  Colombia, Ecuador, Brazil, northwest India, and Sri Lanka.

It is a disease of poverty: it can be completely prevented by wearing shoes, and by providing basic information to the people who are at risk from it.

We could eradicate this disease altogether. It would not be very expensive, and it doesn’t require new medical technologies.  So why don’t we? The problem seems to be that the people who suffer from this disease are poor and marginalised.  There are powerful AIDS lobbies in industrialised countries ensuring that we spend billions of dollars on antiretroviral therapy for people with HIV.  But almost nobody is working to highlight the plight of people suffering from podoconiosis and ensuring that we put in the modest resources needed to bring it to an end.

A British academic, Gail Davey, now working in Brighton but formerly living here in Ethiopia, is an exception to this.  She is working to get the disease recognised, as step towards getting the disease tackled and eventually eradicated.  You can read more about podoconiosis, and the work that Gail does,  in a recent article on Humanosphere. Humanosphere is an interesting new blog by Tom Paulson, a journalist based in Seattle, about global health and poverty, and it is well worth including in your regular reading.

This is a shame, because the development of effective pharmaceuticals has been one of the most transformative new technologies of the last century, increasing life expectancy and the quality of life in industrialised countries and developing countries.

One reason that pharmaceutical companies get a bad rap is that there are some diseases in tropical countries which have been “neglected” – in the sense that there is not much investment in research and development in these diseases, partly because the people who suffer from these conditions are very poor, so there is unlikely to be a commercial return to finding new drugs.

We spend ten times as much looking for cures for baldness as we do looking for cures for malaria.

I can see why this pursuit of profit leaves a bad taste in the mouths of some activists.  Personally I don’t blame drugs companies for this.  They are responding to the economic incentives we set for them.  Indeed, they have a legal duty not to waste their shareholders’ money.  If we don’t like the priorities that emerge from these incentives, we should set them different incentives rather than gripe about it.

So here is some good news.  The World Health Organisation today published a new report on neglected diseases, Working to overcome the global impact of neglected tropical diseases, which covers 17 neglected tropical diseases.

Some of the diseases you will have heard about (such as sleeping sickness and guinea worm).  Some, I guess, you may never have come across: but the burden of suffering they cause across the developing world is immense.

And what is really cool is that drugs companies today announced some important new commitments to provide drugs for these diseases free of charge:

• Novartis renewed its commitment to donate an unlimited supply of multidrug therapy and loose clofazimine for leprosy and its complications.
• GlaxoSmithKline announced a new five year commitment to expand their donation of albendazole through WHO beyond lymphatic filariasis to treat school-age children for soil transmitted helminthiases in Africa. The commitment includes 400 million doses per year for this purpose.
• Sanofi-aventis has agreed to renew its support for the WHO programme against sleeping sickness for the next five years.
• Bayer has started discussions with WHO on how to expand their current commitment to fight sleeping sickness and Chagas disease.
• EISAI has committed to work towards the global elimination of lymphatic filariasis by providing diethylcarbamazine (DEC) and
• Johnson&Johnson has recently also announced expanding its donation of mebendazole to supply up to 200 million treatments per year for treatment of intestinal worms in children.

This is a big deal. Though this WHO statement is wrapped up in medical language, it means, for example, that GSK have just announced they will give away drugs which prevent intestinal worms in children.  This is one of the most cost effective development interventions we know of.  Worms infect more than one third of the world’s population, especially children and the poor. These worms do not normally cause acute illness, but rather a long term, chronic malaise which damages almost all aspects of a child’s development, including health, nutrition, learning and access to education.  A few years ago Miguel and Kremer showed that deworming is a very cost-effective way to increase school participation.  Deworming all the world’s children will make a huge difference to their life chances and their well-being.

There are no magic bullets in development.  Free drugs does not mean that they will reach the poor. There will need to be investment in health systems and logistics to make sure these drugs reach people.  For example, the UK Department for International Development has given £25 million to the Schistosomiasis Control Initiative.   As a result of today’s announcement by drugs companies, SCI will not have to buy drugs, so all that money can be used to ensure that drugs reach people who need them.

Hats off to the drugs companies.  Credit where it is due.

The inauguration of MSI Ethiopia's Woldia clinic

Access to family planning and safe abortion is an important challenge in Ethiopia. With better primary health care and childhood immunization, infant mortality is falling, so families increasingly want to limit the number of children they have.   The shift to smaller family sizes is a hugely important driver of development, known as the demographic transition.  When a family has two or three children, all of whom are likely to survive, they are able to invest in the children’s nutrition, health and education, in a way that is impossible for most families with nine or ten children.  This investment in each person then leads to higher incomes and better standards of living.

The desire to have smaller families is driven by a combination of rising incomes, improved life expectancy, lower infant mortality, better education and increased savings, as well as changing cultural and social norms. It is not clear whether it is possible to influence from the outside the rising demand for smaller families, and I personally have reservations about whether we should attempt to do so.  But in Ethiopia, people want smaller families yet cannot access the services they need to achieve this.

Today Ethiopia and Germany have roughly the same number of people (around 82 million).  But unless something changes, by 2050 Ethiopia is projected to more than double its population to 174 million, while over the same period Germany’s population is likely to decline to 72 million. The cause is simple: Ethiopia’s total fertility rate of 5.4 is four times greater than Germany’s rate of 1.3.

According to the Guttmacher Institute Ethiopia’s average family size is slowly declining, from 6.4 children per woman in 1990, to 5.9 in 2000, to 5.4 in 2005. Yet this fertility rate is still much higher than the average of four children per woman that people actually want to have. Many Ethiopian families want to reduce the number of children they have, but do not have access to the basic family planning services they need to do so. The study finds that 68% of sexually active women in Ethiopia have unmet need for contraception.

Hiwot Melk Tesdik, the new lab technician at Marie Stopes in Woldia

The Guttmacher Institute estimates that would it cost about $180 million a year to provide modern contraception to every Ethiopian woman who wants it (that’s the all in cost, including supplies, logistics, systems, and training).  They estimate that there would be direct savings to the health service as a consequence of reduced pregnancies and unsafe abortions which would more than cover the costs.

And the results would be striking. If every woman who wanted to use family planning had access to modern contraception, each year in Ethiopia there would be 1 million fewer unwanted pregnancies, 340 thousand fewer abortions (a reduction of more than 80%), 130,000 fewer infant deaths and 6,500 fewer women dying in childbirth.

These benefits for individuals and families are compelling enough.  But there would also be substantial benefits for the economy as a whole.  As a rule of thumb a reduction in fertility of one child per family increases annual per capita GDP growth by a quarter of a per cent a year.  Hence if Ethiopian women could achieve the reduction in family size they currently want, from 5.4 to 4.0, this would increase growth of GDP per capita by approximately 0.35% a year.  Over a decade of sustained access to contraception, the effect would be higher incomes worth approximately the same as a 60% increase in today’s level of foreign aid.  And because population growth would be slower, it would achieve the rare double benefit of increasing standards of living while reducing the pressure on natural resources and the environment.

The economic effect of access to family planning could be even greater because it enables a virtuous circle which plays an important part in the development process.  As incomes rise, and education and health improve, families tend to want fewer children.  For example, in Ethiopia over the next decade incomes per head may rise by more than 50%, which is likely to lead to a further fall in the number of children that Ethiopians want to have.  But to meet this desire for smaller families, people need access to family planning.   By setting off a virtuous circle of rising income per capita, lower desired family size, greater use of contraception, lower numbers of children, and so rising income per capita, a decade of access to modern family planning could have roughly the same effect on incomes in Ethiopia as the entire international aid programme does today.

As well as family planning, Marie Stopes also provides access to safe abortions under the provisions of the Ethiopian law. Ethiopia has one of the highest rates of maternal deaths in the world and about a third of these deaths are the result of an unsafe, back-street abortions.  This means that about twenty Ethiopian women will die in agony today as a result of lack of access to a safe abortion; and twenty more will die tomorrow, and every day until women have the services they need.  Despite being a very religious society, there is almost no political or opposition to abortion here, perhaps because almost everybody has had a family member, or knows somebody close to them, who has died of an unsafe abortion.

Some aid agencies who profess to care about reducing maternal mortality remain studiously silent about this avoidable slaughter. It is alarming that in yesterday’s UN  strategy, Every Woman, Every Child, abortion is mentioned by none of the donors, NGOs or business organisations, and among developing countries only by Cambodia and Zambia. If we don’t provide access to safe abortions, we cannot credibly say we are making a commitment to “every woman, every child”.  To its credit, the new UK government has said that it will focus on family planning and reducing maternal deaths, and it has launched a public consultation about how to achieve its goal of doubling the number of maternal and infant lives saved.  And it is heartening to see that they explicitly talksabout the need to address unsafe abortion as part of this strategy.

Dancers at the inauguration of a new Marie Stopes clinic in Woldia

The manager of the Marie Stopes clinic in Dessie told me some distressing stories about the women that go to the Dessie clinic for an abortion.  Some of the most difficult cases are women working as maids in other people’s houses, who have been raped by their employer. By the time they have saved up enough to afford an abortion, it is often too late in their pregnancy.

Which brings us back to opening this week of the new Marie Stopes clinic  in Woldia.  This hillside market town expanded rapidly in the 1980s after the completion of the “China Road” west to Lalibela and Bahir Dar, which meets the road between Dessie and Korem at Woldia. (This is a useful reminder that Chinese involvement in infrastructure in Africa is not an entirely new phenomenon).  Woldia is still growing rapidly, and today resembles a huge construction site.  It is a key transport junction and truck stop, and there is a lot of demand for sexual and reproductive health services.  Woldia has a hospital and a health centre, but until this week many women had to go to Dessie (about 3 hours by road) to get access to family planning and safe abortions.

Marie Stopes works closly with the government, complementing the government’s own provision of health services (as it does in the UK, where Marie Stopes provides about a third of the abortions performed on the National Health Service.)  Many of the town’s key government officials came for the opening of the new clinic, and the ribbon was cut by Ato Shemeles Belachew, the administrator of North Wollo Zone, a region of 1.6 million people.

It is trite to say that the new Marie Stopes clinic in Woldia will help women more directly than a UN Global Strategy.  If the strategy helps bring more attention to the neglected issues of the health of women and children, it may help to create the conditions in which organisations like Marie Stopes can get government support and funding to continue to expand their services. These high level international agreements can, in principle, play a useful role, by drawing attention to key issues.  This is especially true of issues, like family planning and women’s health, which tend to be ignored by male-dominated political discourse.

Ato Shemeles Belachew, Administrator of North Wollo Zone cuts the ribbon on the new Marie Stopes Clinic in Woldia

Though it calls itself a global strategy, yesterday’s UN press release Every Woman Every Child does not constitute a global strategy. It is a list of activities by a good number of developing countries, donors, NGOs and businesses.  That is not meant as a criticism: unlike other issues which are genuinely global (like climate change or tax cooperation), access to family planning is an issue that will have to be sorted out country by country, so a global strategy is unlikely to be either helpful or necessary.

Many NGOs are obsessed with input commitments and whether this is “new money” – if one were uncharitable one might think that this is because they expect some of the money might flow through their own organisation.  Patrick Watt from Save the Children UK was on the BBC World Service this morning saying that they would be looking carefully at the commitments to see what is new.  A press release from Oxfam calls for donors to “put their money where their mouth is” and provide “answers on where this new money will come from.” None of this is the point.  A lot of what is in the paper is evidently a restatement of existing commitments, both by donors and by developing countries. Perhaps in the course of compiling the list there has been some arm-twisting to get some countries to beef up their existing plans, and to the extent that this arm-twisting was successful, more money will be allocated to maternal and child health.  In almost all cases this will have been diverted from elsewhere in that country’s aid budget: whether or not that’s a good thing depends on which other parts of the aid budgets will get less money as a result.

What matters about the UN announcement is not the inputs, but that it draws attention to the importance of doing more to improve the health of women and children, including family planning, for the well-being of families in developing countries and for economic development. Because the main value of the UN announcement is the signal it sends, rather than the inputs it commits, it is hugely depressing and potentially rather damaging that it contributes to the conspiracy of silence on the need for access to safe abortion.

Long story short: it is great that there is renewed interest in the health of women and children.  Family planning not only improves the lives of individual families, it has the potential to enable a country to move onto a virtuous circle of development and demographic change.  The UN strategy isn’t really a strategy, which is fine; and it is important not for new input pledges but because it highlights the importance of the health of women and children. Because it is the signal that matters, it is depressing that the strategy does not talk about the need to end unsafe abortion.  And I’m insanely proud of what my partner does to make the world a better place.

(My partner works for Marie Stopes International which provides family planning and sexual health services in over forty countries around the world.)

You can think of patents as a kind of prize.  When you invent a new product, the government gives you the right to operate a temporary monopoly. This enables you to charge more than the marginal cost, and the premium is your “prize”. This arrangement has the huge advantage that it links your reward to the amount people are willing to pay for your invention, so it encourages innovations that people actually value.

This kind of prize as a reward for innovation may be fine for a new kind of vacuum cleaner, or for Lady Gaga’s latest album. But it has two big disadvantages which are especially relevant for people who live in developing countries.

First, the use of patents prevents some people from benefiting from the new technology if they are unable to pay the higher price.  If a company develops a drug for heart disease, or a more efficient form of solar panel, the patent will enable them to charge much more than marginal cost for their product. That’s how the inventor gets paid. But the result is that millions of people will not be able to afford that product – though they might be able to afford it at marginal cost. The temporary monopoly results in fewer people benefiting from new technologies than ought to benefit, in the sense that those people would be willing and able to pay the marginal cost.  This is potentially a big welfare cost to society as a whole. It means, for example, that people may die of heart disease because they can’t afford the high price of the drugs, even though they could buy the drug if it were sold at marginal cost; or they can’t use new fertilizers or seed technologies, even though the benefits to them of doing so exceed the cost.

Second, if we reward inventors by granting them temporary monopolies, we only create incentives to develop products for which there are likely to be enough consumers wealthy enough to pay a monopoly price.   Nobody will invent a vaccine against malaria, or a cassava plant that resists mosaic virus, based on the possible rewards they will get from charging high prices to its consumers.  So the patent system is a prize for people who invent cures for baldness, but not a prize for people who invent ways to prevent the spread of malaria.

For these reasons, other incentives, such as prizes, Advance Market Commitments, and similar mechanisms, may be effective either as alternatives or complements to the patent prize of a temporary monopoly, especially for technologies that would have benefits in developing countries.

The Economist quotes Tachi Yamada, the president of Global Health at the Gates Foundation, as suggesting that Advance Market Commitments or prizes may not work well for drugs that require a long time to develop:

Tachi Yamada of the Gates Foundation is a big believer in giving incentive prizes, but gives warning that it can take 15 years or more to bring a new drug to market, and that even AMC’s carrot of $1.5 billion for new vaccines may not be a big enough incentive. No prize could match the $20 billion or so a new blockbuster drug can earn in its lifetime. So, in some cases, says Dr Yamada, “market success is the real prize.”

This seems to reflect the suggestion that is sometimes made that Advance Market Commitments may not be appropriate for for early stage drugs, but the economics of this argument is faulty.

It is clearly true that the reward for bringing to market an early stage medicine, such as an AIDS or malaria vaccine, would need to be higher, both because of the greater uncertainty and risk of failure, and because the rewards are further in the future.  So an AMC for an early stage product would probably need to be larger than for a late stage product that just needs some tweaking for use in developing countries and some investment in bigger production facilities.  But let’s not overstate this.  The median total market size for new chemical entities that pharmaceutical companies actually bring to market is about $3-$4 billion.  Most medicines are not $20 billion blockbusters.  So $3-$4 billion is roughly the market size that the private sector considers sufficient reward to develop new medicines.   We don’t need to match the blockbusters.  An AMC of $4 billion might well be enough to incentivize the development of a malaria vaccine: and let’s not forget that if it turns out not to be enough, it won’t have cost the funders anything.

Furthermore, just as the firms discount the prize by the risk of failure, the funders should similarly discount the cost.  If there is a 25% chance that no vaccine will be developed (because the technology is uncertain) then firms will discount the “prize” – that is, the value of the committed market – when they make their investment decisions.  But in this case, the expected cost to the funders of a $4 billion pledge is $3 billion, and this is what they should include in their value for money calculation.  That means that even though the nominal amount that has to be promised for an early stage product needs to be higher for a given impact on R&D, to take account of the probability of failure, the expected cost to funders is not higher.

The same point can be put another way.  A high probability of failure makes all investment in R&D less attractive, but it does not make AMCs relatively less attractive than other forms of funding.  When the probability of failure is high, the expected return from each dollar spent encouraging innovation is lower. This is true if that dollar is spent up-front in the form of research grants of the kinds normally given by aid agencies and foundations (since the higher probability of failure reduces the expected benefits of the grant), or in the form of a prize or promised market (since the higher probability of failure reduces the expected benefit to firms, and so reduces the incentive for them to invest in R&D).  The effect is the same either way. Higher probability of failure is clearly bad, but it does not make AMCs relatively less efficient as a way to pay for research for early stage products.

Whether an AMC for an early stage product is good value for money depends ultimately on the value of the product.  If donors were to spend $4 billion buying a malaria vaccine for use in developing countries, it would be a hugely good investment, saving millions of lives a year at a fraction of the price of many other interventions. It would result in huge savings on trying to prevent malaria in other ways, or treat to treat malaria; and the resulting reduction in the burden of malaria would have huge economic benefits for developing countries. Given that there is no question that donors would want to spend at least $4 billion paying for a malaria vaccine to be used across the developing world, it is inefficient for them not to say so right away, and thereby create incentives for private sector investment in accelerating its development.  The risk of poor value for money in aid spending comes not from making the commitment, but from failing to do so.

When Dr Yamada says that “market success is the real prize”, he seems to be missing the point that market success is not a good way of rewarding innovation for developing countries.   If we rely on market success, in the form of a temporary monopoly, to reward innovation then we will exclude half the world’s population from being able to access technologies developed with rich markets in mind, such as drugs against cancer and heart disease, clean energy, new agricultural technologies, or new software.  And “market success” creates no incentive to develop technologies which primarily benefit the world’s poor such as a vaccine against malaria or a variety of cassava that resists the mosaic virus, because inventors know that the people in poor countries cannot afford the monopoly prices that would enable inventors to recover their costs.

That question goes to the heart of one of the most controversial debates in global health: Is humanity better served by waging wars on individual diseases, like polio? Or is it better to pursue a broader set of health goals simultaneously—improving hygiene, expanding immunizations, providing clean drinking water—that don’t eliminate any one disease, but might improve the overall health of people in developing countries?

The new plan integrates both approaches. It’s an acknowledgment, bred by last summer’s outbreak, that disease-specific wars can succeed only if they also strengthen the overall health system in poor countries.

We already knew that, right? The big philanthropic foundations pride themselves on trying new approaches, and not being constrained by conventional thinking. Great. But it is a pity when they have to reinvent the wheel themselves.

Even if the quantitative analysis is correct (which is by no means certain, given huge gaps in information), it is far from clear that this is a problem that needs to be solved. Furthermore, of the five recommendations in the paper, three are irresponsible sectoral special pleading which deserve to be rapidly dismissed.

This story has spilled over into the mainstream press (for example, in The New York Times) as a result of a sensationalist AP story headed “Health Aid Made Some Countries Cut Budgets“. The story breathlessly reveals:

After getting millions of dollars to fight AIDS, some African countries responded by slashing their health budgets, new research says. For years, the international community has forked over billions in health aid, believing the donations supplemented health budgets in poor countries. It now turns out development money prompted some governments to spend on entirely different things.  … “When an aid official thinks he is helping a low-income African patient avoid charges at a health clinic, in reality, he is paying for a shopping trip to Paris for a government minister and his wife,” said Philip Stevens, of the London-based think tank International Policy Network.

The language used by the authors is less inflammatory, but the opening sentence makes it clear they think there is a problem:

Government spending on health from domestic sources is an important indicator of a government’s commitment to the health of its people, and is essential for the sustainability of health programmes.

As summarized in their press release, the authors make five recommendations to deal with this alleged problem:

• adoption of a clear set of reporting standards for government health spending as source and spending in other health-related sectors
• establishment of collaborative targets to maintain or increase the share of government expenditures going to health
• investment in developing countries’ capacity to effectively receive and spend health aid
• careful assessment of the risks and benefits of expanded health aid to non-governmental sectors
• study of the use of global price subsidies or product transfers as mechanisms for health aid

The first recommendation is fine: I’m all for the adoption of reporting standards for spending by donors and by governments, and for those standards to specify the source as well as the destination of all spending. (The authors may not be aware of the progress that is being made globally on this under the International Aid Transparency Initiative).   It is also hard to be against investing in the capacity of developing countries to receive and spend health aid, though I wonder what this means in practice.  The other three recommendations are irresponsible, for reasons we shall come to below.

Let’s start with the problem we are trying to solve.  It is far from clear that the behaviour of developing countries described in the paper is anything we should be concerned about.  Of course health advocates who earn their living from health spending in developing countries are up in arms at the news that their various wheezes to capture a big chunk of available development finance and redirect it to their cause may not have been a complete success.   But those of us who take a more objective view of the relative priorities of different types of development spending can be more sanguine.

There are at least four reasons why the findings of the paper should not be a cause for concern.

First, it suggests that governments are reprioritising their spending in the light of the aid they are receiving. I think this is a good thing.    Exercises to find out what poor people actually care about, such as Voices of the Poor, routinely find that the poor place put a lot of value on security (of person and property), but this does not usually excite people who work in development.  Donors find it more attractive to finance health services than to pay for essential services such as a national statistical office or the efficient functioning of courts.  If we are willing to pick up the bill for health care then it is not only reasonable but desirable that developing countries should use the fiscal space we have created to invest more in important national priorities that don’t happen to be of interest to their donors.

Second, increases in aid for health may well come at the expense of other forms of aid which developing countries are right to try to offset.  (I say “may well” because of course we don’t know what would have happened to total aid if health aid had not increased so rapidly.)  Donor fads come and go: this year it is agriculture.  When developing countries see health aid rising, but the donors losing interest in infrastructure, the most sensible thing they can do is make an offsetting shift in their own budget allocations.  When the donor pendulum swings back again, recipient countries will have to make the corresponding shift in the opposite direction.

Third, as eloquently pointed out by Sridhar and Woods in the Lancet, the desire to force changes in the spending priorities of recipient countries runs directly contrary to the evidence about what makes aid effective, and a series of international agreements, especially the Paris Declaration (2005) and Accra Agenda for Action (2008). In the face of evidence that aid is most effective when there is ownership by the recipient country, donors and multilateral agencies committed themselves to align their aid with the systems and priorities of recipient countries.  It is not OK for health sector lobbyists to ignore this because they don’t like the priorities actually chosen by developing countries.

Fourth and finally, we say that we want to see capable, accountable and responsive states in developing countries.  Making, passing and executing budgets is the very heart of a capable and accountable state. That is why in the UK, as in many other western-style democracies, a government which cannot pass its budget (“carry supply”) is deemed to be unable to govern.  If resource allocation priorities are determined elsewhere, then the government is one in name only.  We cannot expect governments to be accountable to their citizens for decisions that they have not made.  If we want accountable states rather than puppet client states, we should rejoice, not complain, when they demonstrate a willingness to make choices of their own.

Sectoral advocates may say that we should not accept the priorities determined by developing countries, especially in countries in which there are weaknesses in democratic accountability or technical ability to execute budgets.   They might say that the government represents the interests of an elite, not the majority of the country’s poor.  Of course that may be true in some countries: but there is no reason to think that donors’ priorities, also driven by vocal lobby groups and vested interests, reflect the real needs of a country or its poorest people.  We should avoid getting into the situation in which well-heeled foreign academics and lobbyists from international NGOs with no accountability to people in developing countries are treated as a more representative voice of the poor than their own government.

What is most shocking about this paper is that it betrays a combination of ignorance of, or indifference to, decades of experience about what works in development.  The three most egregiously inappropriate recommendations amount to setting input targets, bypassing government by using NGOs, and giving aid in kind rather than in cash.  The paper’s authors should pause to reflect on the fact that progressive development thinking has fought a long, slow, painful campaign to shift away from exactly this kind of aid, and for very good reasons.  Aid that leads to long-term, sustainable change must be based on real ownership of the developing country and help build rather than undermine or marginalise national institutions.

To be fair to the authors, the press release is quite measured, and it begins by highlighting the commitment to health by developing country governments.  It also highlights the most important and sensible of their recommendations, the need for greater transparency.   But the paper also irresponsibly creates the impression, amplified by the Associated Press, that health aid has somehow been wasted, and that donors should try to address this in ways that would be a couple of steps backwards on the long slow road to more effective aid.

This is consistent with what Michael Clemens at CGD has been saying for a while. (Take a look at his very accessible and interesting article in Foreign Policy, for example).

Yet it remains the received wisdom that industrialised countries should do more to prevent workers from moving from developing countries to rich countries.  There is an unappealing alliance between the development activists and the unions to limit the use of medical professionals in the British National Health Service.

It is becoming increasingly clear that preventing people from developing countries from accessing the labour market in developed country impoverishes poor nations in a the same way as preventing access to our markets for goods and services.  Yet this is a campaign that development advocates are strangely reluctant to take on.

And it is because I like GAVI that I was alarmed to read this recent statement of their business model:

GAVI’s business model is based on the expectation that rising demand for immunisation in developing countries induces more companies to produce vaccines, thus creating competition and driving prices down.

Why this is not their business model

Read that sentence again and you will see that it makes no sense.  If prices are going to fall, why would more companies enter the market and create the competition that forces prices down?  (Perhaps they don’t read GAVI’s website and so they don’t know what is in store for them?)

Let’s go back to the supply and demand curves of undergraduate economics (see diagram).  If you move the demand curve out (“rising demand for immunisation”) then quantities and prices will both increase.

The very best you could hope for is that supply of vaccines is very elastic (it isn’t, sadly); in that case the supply curve (the blue line) would be quite flat and the rise in price would not very large when demand increases.

But supply curves are not flat (at least, not in the short run) and they certainly do not slope downwards, so prices ain’t gonna fall when demand goes up.

I defy GAVI to produce an analytical model that underpins their “business model” as they describe it above.

So what should GAVI’s business model be?

There are two ways that GAVI can bring down the price of vaccines: one bad, one good.

GAVI can work with UNICEF to drive down the price of vaccines by using the market power of a monopoly buyer (a “monopsonist”).   When vaccine manufacturers make a sale, there is something in it for the seller (profit) and something in it for the buyer (the vaccine is worth more to them than they pay for it).   The division of these benefits (the “surplus”) depends on the bargaining power of the parties.  If GAVI and UNICEF can use monopsony powers, they can extract more of the surplus, by driving down the price and hence the profits of the vaccine manufacturer.

In the world of development advocacy, pharmaceutical companies are pantomime villains, making outrageous profits at the expense of the poor.  So reducing their profits and holding down prices must be good, right?

Well yes, if you don’t want pharmaceutical companies to invest in research and development for future medicines for developing countries, if you don’t want them to invest in manufacturing facilities big enough to produce in large volumes for these markets, and you don’t want them to spend time and money getting their products regulatory approval in those countries, then driving down their profits is exactly what we should be trying to do.  Of course, Big Pharma can look after itself, and that is what it does. When we take away their profits in developing countries then they will go and make profits somewhere else.  Dastardly villains.

Driving down the commercial viability of medicines in developing countries may not be our best plan. It may feel good in the short term sticking it to Big Pharma, but that is not necessarily good public policy. The anti-pharma campaigners should be glad they won’t be the ones who have to  explain to a woman comforting her child dying of malaria why there is no vaccine for this disease.

This isn’t a theoretical risk: it is what has actually happened to the vaccine industry over the last 40 years.

Although this is not a great strategy, is is the approach being pursued by some global foundations such as the Clinton Foundation.  The UNICEF procurement division has similarly long had the objective of driving down prices, without regard to the long-run viability of the businesses developing and supplying pharmaceuticals to the developing world.

But GAVI can do something which benefits both developing countries and the pharmaceutical industry, increasing quantities and reducing prices.  It can help to reduce the cost and the risk of producing vaccines for developing countries. By pushing down these costs, the result can be higher volumes and lower prices, in a way that does not simply transfer the surplus from producers to consumers.

One way that GAVI can (genuinely) reduce costs without damaging the industry is by entering into long term contracts for vaccine purchases.  Both the International Finance Facility for Immunization and the Advance Market Commitment are excellent examples of this approach [UPDATE: in the light of David Roodman's comment below, let me clarify that GAVI is already doing this, which is excellent.  My view is that they should do more of it.]  Long-term commitments enable manufacturers significantly to increase production volumes and reduce unit costs (because the large fixed costs are spread over more units).

It is the ability to make commitments, not the increase in demand, that is important here.  Long term commitments are important because without them, vaccine manufacturers are vulnerable to “hold up“, a problem familiar in the economics literature on industrial organisation and utility regulation.  Manufacturers face the risk that, once they have invested in developing a new vaccine, getting regulatory approval, and spending hundreds of millions of dollars putting in place large-scale manufacturing capacity, the donors will then gang together to use monopsony purchasing power to drive down the price to around the marginal cost, ignoring the sunk costs of developing and producing the vaccine. At marginal cost pricing, the manufacturer never recovers the cost of their investments.  After the vaccine has been manufactured, this is a rational thing for donors to do, since it reduces the price to a level at which the largest number of vaccines can be purchased.  But before the vaccine is manufactured, the vaccine companies anticipate the likely future behaviour of donors, given the donors’ incentives; and this undermines the investment case for developing and producing vaccines for the developing world.   Donors can avoid this by entering into a long-term commitment which prevents them from driving down the price later on.

GAVI can also use its expertise and connections with government to streamline and simplify regulatory processes, which are a big cost driver.

Costs will fall, and demand will rise, as a result of this approach.  But this is the opposite way round from GAVI’s current (economically illiterate) business model: under this approach the rise in demand is a consequence of the fall in prices, not the cause of it.

So GAVI can have most impact by doing the opposite of what many people think it should do (and the opposite of what some other global funds try to do).  Rather than using its market position to drive down prices, damaging the long-run viability of the vaccine industry, it should use its position to enter into long-term contracts which enable manufacturers to produce at high volumes and low unit costs.

This means that rather than trying to drive down prices by increasing competition, GAVI’s business model should be to lower prices and so increase the amount of vaccines bought and used, while promoting the long-run health of the vaccine industry, by helping to reduce costs and risks for producers.

Because the total resources available are less than the needs, it is very important how they are used.  If poor decisions are made about the allocation of precious aid resources, the result can be additional suffering and death for millions of people.

This post why I think that attempts from outside to argue for aid to be earmarked for particular causes can lead to unnecessary deaths and suffering.  Aid works, but it could work better, and many sectoral advocates are not helping.

***

A striking example is the amount of money donors earmark for spending on HIV and AIDS here in Ethiopia.

Government spending on health in Ethiopia comes to about $4 per person per year.  According to OECD/DAC data, foreign aid for health in 2007 added about $5.15 per person to the government’s resources, bringing the total of government and aid resources to about $9 – $10 per person per year. (As an aside: health spending per person per year in the UK is about $2,000 per person per year; in the US it is about $4,500.)

According to the World Health Organisation (WHO), in Ethiopia about 65% of the population (52 million people) live in areas at risk of malaria. Malaria is the leading cause of health problems, responsible for about 27% of deaths; and malaria epidemics are increasing. The HIV/AIDS prevalence rate among adults is 2.1% (2007) – that’s about 1.6 million people living with HIV.

Of $5.15 per head provided in aid for health to Ethiopia in 2007, about $3.18 per head was earmarked for HIV  while about $0.26 cents per head was allocated to malaria control.  Given the relatively low burden of HIV, earmarking 60% of health aid for HIV is excessive relative to other needs for health spending.

Of course it is right that we should try to make sure that everybody with HIV has access to medicines to keep them healthy, and we should work to prevent spread of the disease. But we should also make sure that people have bednets and drugs to stop malaria, provide childhood vaccination to prevent easily preventable diseases, ensure access to contraception and safe abortions, and, above all, enough funding to provide basic health services that would save thousands of lives and suffering.  Yet we are not willing to provide enough money to do all of this.  It is in this context that it is damaging to earmark 60% of health aid to HIV.

This excessive funding of HIV relative to other health needs is damaging in at least three ways.

First, aid money is not being spent in ways which would yield biggest impact. Take this analysis from the Open Budgets Blog:

Using these estimates, it would cost an additional US$29.7 million to treat all of the 540,000 kids who died from pneumonia/diarrhea in Nigeria and Ethiopia. Were this money to come out of the HIV budget, it would reduce the number of HIV patients that could be provided treatment by about 61,240. So, using these admittedly very rough estimates, our current allocation of resources from the pot of money for disease treatment suggests that we value the life of a person with HIV at 8.8 times the value of the life of a child with pneumonia.

Another way of looking at this is that reallocating resources from HIV to treating pneumonia and diarrhea in Ethiopia and Nigeria alone would have saved nearly half a million additional lives in one year.

Second, the misallocation of aid money sucks scarce resources (administrators, doctors, political attention) from other programmes which would have more impact. As Rakesh notes:

In Tanzania, I have seen any number of health centers which lack water and toilets, where women cannot deliver their babies safely, but which has a new building with 4 air conditioners and 2 Land Cruisers and weekly workshops on AIDS.

I wrote about this problem in 2007 after visiting a clinic in Burkina Faso which had been starved of medical workers by the recruitment drive by the local PEPFAR-funded clinic. And Laurie Garrett wrote in Foreign Affairs about the impact on basic health facilities of funding linked to specific diseases.

Third, the misallocation of aid money creates perverse, possibly lethal, incentives.  Here in Ethiopia the existence of huge amounts of aid money for AIDS chasing too few people with HIV means that there is a kind of welfare state emerging for people with HIV.  It is not perhaps the welfare state we see in many European countries, but it is much better resourced than is available for people without HIV.  As well as free health care, people living with HIV are supported to find work, and their children get free education.  NGOs fall over themselves to get people living with HIV and their families onto their lists.

The result is that some Ethiopians emerge from being told the results of their voluntary HIV tests in tears because they don’t have the disease and so do not qualify for this assistance. The quality of life for them and their families would be better if they did; and their life expectancy could well be higher, given the access to health services that would be unlocked.  There are even rumours here in Addis Ababa that some people are deliberately getting themselves infected, so that they can give their children a better start in life.

***

I have used the example of HIV because the misallocation is particularly egregious here in Ethiopia (as it is in some other countries in sub-Saharan Africa). But I do not want this to be misunderstood as an attack on AIDS activists, or on funding for HIV in particular.  Some of my best friends – indeed, some members of my family – are AIDS advocates and they are among the most committed and well intentioned development advocates.  If they had been listened to earlier, a great deal of suffering in sub-Saharan Africa and elsewhere could have been avoided; and the path to development would not have been so long and arduous for the countries most affected by AIDS.  These advocates are merely one group among many making the case (and earmarking funds) for their cause.

Look, for example, at this recent paper by ODI on education (funded by the Hewlett Foundation) which complains that while funding for basic education has grown in real terms it has not grown as a share of total aid. The paper is all about how education advocates can do more to “capture” the global stage and compete with health spending. (“Capture” is their word, not mine).  And I am not picking on education either.  There are endless demands from activists to commit more money to agriculture, microfinance, water, maternal mortality and a long list of other important issues.

The development industry seems to be riddled with people whose main job is to divert money  to their good cause.   The advocates are united by a strong belief in the priority that should be given to their sector (education, water, AIDS etc). They convince themselves that they are speaking for real interests of the poor, which they consider to be unaccountably neglected by everyone else. Within many aid agencies there is a permanent state of low intensity bureaucratic warfare for resources, sucking up the time and attention of staff as they fight to defend and expand funding for the causes they work on.  They deliberately stoke up pressure in private alliances with civil society organisations – many of whom they fund – to raise the political stakes through conferences, international declarations, and publications with the aim of committing funders to spend a larger share of aid resources on their issue.  Territory is captured and held by way of international commitments in summit communiques.  But for the aid budget as a whole these are zero sum games, and everyone would be better off – and many lives would be saved – if it stopped.

The advocates might defend themselves by saying that they are trying to bring more money into development, not to reallocate aid from one cause to another.  But as they know, or ought to know, that is not how development budgets work.  The UK commitment to spend $15 billion on education by 2015 does not advance by one day the path to UK aid reaching 0.7% of GDP.  Either the commitment is meaningless, because that much money would have been spent on education anyway; or it has resulted in a reallocation of aid within a fixed total to education from something else which would otherwise have been a higher priority.

The earmarking of funds within a fixed total takes money from one good cause and puts it into another. If the money moves to a lower priority, the result is additional suffering, more deaths, a longer journey to economic development, and the need to give more aid, for longer, than if choices were driven by locally-determined, well-informed, evidence-based decisions about needs and priorities.

Here in Ethiopia, the Minister for Health is very clear sighted and articulate about the health priorities for his country, and the need to allocate resources to building effective basic health systems.  Within the limited resources it is able to control, the Ethiopian health ministry makes intelligent decisions about priorities, understanding the variations within the country as well as between countries.  They have much more detailed and specific understanding of the issues that affect people here than well-meaning activists in Europe or America.  Furthermore, it is their country and their path to development, not ours.

***

What do we need to do differently? I set out in a recent  CGD Working Paper the need to address the political economy of aid.

First, we should be much more rigorous and systematic about defining and measuring results from aid so that well-informed choices can be made.  There is a huge and expensive industry of “monitoring and evaluation”, most of the results of which is worth less than a pitcher of spit. We should dismantle it, and use a fraction of the money to fund a smaller, more sharply focused, more rigorous, international, independent collection of real evidence about the cost effectiveness of development interventions.  (Tentative steps in this direction are, of course, being fiercely resisted by the trade union of evaluators.)

Second, we should try to stop earmarking aid; we should make more use of results to demonstrate that aid is effective. The Paris and Accra agendas for aid effectiveness, which have been agreed by all the donor nations, require donors to respect the development priorities of aid recipients.  But there has been almost no change on the ground in this direction.  One step towards doing this is to put in place simple but rigorous ways to measure and attribute results, so that donors can be confident about  (and can explain to taxpayers) how their aid has been used.  If we cannot produce compelling evidence about what aid has achieved, it should be no surprise that ministers and taxpayers want to determine in advance how the money will be spent.

Third, we should stop creating global funds, and merge or close the ones we have got.  The existence of bureaucracies whose raison d’etre is to spend money in a particular sector or in a particular way creates incentives to promote resource misallocation because it protects jobs and institutional budgets.

Fourth, we must massively increase the transparency of past, present and future aid, so that informed decisions can be taken about how resources are allocated (not just between countries and sectors but within them).  Under current arrangements, donors publish details of their aid up to 23 months after it has been spent. Donors need to publish detailed information about their current and planned future activities so that governments, donors and the private sector can identify the gaps where additional resources would have most effect.

Fifth, we should, as a development community, heap scorn and opprobrium on anyone caught advocating for more resources in their sector.  We need stronger social norms in development that frown upon this kind of anti-social behaviour.

***

You may think that this is all a bit over the top.  Arguments about the architecture of aid may sound rather abstract and rarified, but aid is a scarce, precious resource and it is no exaggeration to say that if we spend it badly, the result is the avoidable deaths of literally millions of people.

Pause for a moment in silent thanks to the staff of the GAVI Alliance which works to get immunisation to children in developing countries.

If you pay taxes in Italy, the UK, Canada, Norway, or Russia, pat yourself on the back.  Your government has contributed to a market-based financing mechanism called the Advance Market Commitment, or AMC.  This provides  an incentive for vaccine makers to produce suitable vaccines in the necessary quantities at an affordable price for developing countries. The result is that GAVI has been able to reduce the current price of existing pneumococcal vaccines by up to 90%.

In the past, it often took 15 or 20 years before vaccines developed for rich countries were sold at affordable prices in developing countries.  Because of the Advance Market Commitment, four vaccine suppliers are now offering pneumo vaccines, specifically developed for the the developing world at affordable prices.

This is aid at its best: creating financial incentives for companies to bring their expertise and innovation to the table to solve some of the world’s most pressing problems.  Donors only pay for vaccines that actually get delivered and used. This money will save the lives of about seven million children over the next 20 years.

We owe a debt to Michael Kremer and Rachel Glennerster for the idea, to the Center for Global Development (especially Ruth Levine) for developing a practical proposal, to Carlos Monticelli from the Italian Finance Ministry who steered a group of donors to make it happen, to the Bill and Melinda Gates Foundation for paying for background research, to Orin Levine, Gargee Ghosh, Amy Batson, John Hurvitz, Andrew Jones, Susan McAdams, and many others for making it happen.

And to the countless bureaucrats and nay-sayers who thought it could never happen: yah-booh-sucks.

Traditionally it has taken up to 20 years for new vaccines to reach children in developing countries. The AMC can fix this inequity. Through the pneumococcal AMC, and with the support of the GAVI Alliance which administers it, children in Rwanda and the Gambia are benefiting from pneumococcal vaccines even before children in wealthy countries such as Austria and Japan. What’s more, the mechanism is spurring development and deployment of two newer vaccines that extend protection against strains of pneumococcal disease most common in the developing world. Thanks to such advances, the accelerated use of pneumococcal vaccination is projected to save 5 to 7 million lives by 2030.

The idea (which is mainly down to Michael Kremer at Harvard) is simple: donors promise in advance that if somebody invents and delivers a vaccine that meets certain requirements, then donors will  pay for it to be bought in large quantities.  That promise may provide sufficient certainty for the private sector to invest in developing new products, and to build large-scale manufacturing facilities.  Take a look at this video to see what a difference Michael’s idea is already making.

From a public policy point of view, a nice feature of this schemes is that if it doesn’t work, it doesn’t cost anything.  If you make a promise to purchase an AIDS vaccine when one is developed, but scientists are unable to crack the puzzle, then you have not spent a dime.  You are only committed to buying an AIDS vaccine when it is developed – which, let’s face it, you would have done anyway. By making a firm commitment in advance, you change the incentives for the private sector.  (The economics is set out here in an article in The Economists’ Voice.)

This scheme is designed to tackle an economic problem that runs deep in most market  economies. We typically set up incentives for firms to innovate by promising them a temporary monopoly (through patents) if they are successful. This enables a firm to charge a premium for a limited period to recoup its investment and to compensate it for the risk it has taken.  But this scheme only works if the consumers are willing and able to pay that premium.  (And even then, it has a social and economic cost because it excludes consumers too poor to pay the premium).  The scheme doesn’t work at all for products most of whose consumers are very poor – such as people who get malaria or who need cassava plants that are resistant to attack by the mosaic virus.  That’s why firms spend ten times as much hunting for a cure for baldness as they do hunting for a cure for malaria.  The Advance Market Commitment makes investment in those products much more attractive to the private sector, because now there is an opportunity to charge a premium (paid by the donors) even though the ultimate consumers are poor.

We will be in a better position to judge the effectiveness of the pneumococcal AMC when kids are actually getting injections paid for under the AMC. An important test will be whether we see pharmaceutical firms returning to the development and large-scale production of vaccines for developing countries (and there are some early signs that this is happening).

But the Pneumococcal AMC has already taught us that it is possible to navigate the legal, financial, commercial and political waters to put in place a legally-binding multi-donor commitment to buy a future product. This is the result of outstanding work done by the Center for Global Development (in which I am proud to have played a small, walk-on part).  Early nay-sayers complained that an AMC was theoretically attractive but impossible in practice.  CGD played a critical role by developing a practical way of implementing the idea, which opened the door to the implementation of the pneumo AMC.

Now that it has been shown that an AMC is technically possible, we should be looking at:

• designing an AMC for an “early stage” vaccine such as AIDS;
  It is occasionally said that an AMC works for a late stage product – ie one that has already been largely developed but needs incentives to get it produced – but that it would not be appropriate for products still requiring substantial research and development.  There is no logic to this argument. The original modelling for an AMC was done for an early stage vaccine, and I have never seen a cogent case against using the approach (alongside conventional government funding for basic research) for products at an early stage of development.
• how to get the United States involved
  This approach – of providing incentives for private sector entrepreneurship and risk taking  to be involved in products for developing countries – ought to appeal to US policy-makers, and I have never understood why the US stood aside from the first AMC. There are some technicalities involved making commitments in the US budget process but these are not insurmountable.  Let’s hope the US will be part of the next AMCs.
• using the AMC approach for other health products
  In principle, the AMC could be used to encourage the development and manufacture of a range of other health products such as drugs, diagnostics and surgical instruments
• using the AMC to promote other forms of other research and development
  we should consider whether the AMC might be a good approach for donor funding of other forms of research and development for products mainly used in the developing world, such as new agricultural varieties, solar energy products, and ways of providing clean water.
• the possibilities for other forms of “pull” incentive for research and development
  The AMC is not the only possible pull mechanism to incentivise research for products needed in developing countries. For example, donors might set up schemes to buy out patents, prizes or other rewards for success (e.g. payments linked to DALY’s averted or social rates of return). We should look again at the costs and benefits of these different ways of getting the private sector involved.

Imagine that your daily earnings were less than the price of this newspaper. Would you consider buying private education and private healthcare?

Before you make up your mind, here are a few considerations: government healthcare and primary education are free; the private-sector doctors are ignorant quacks and the teachers are poorly qualified; the private schools are cramped and often illegal. It doesn’t sound like a tough decision. Yet millions of very poor people around the world are taking the private-sector option. And, when you look a little closer at the choice, it’s not so hard to see why.

Now there is a dilemma here.

On the one hand, we know that charging even a very small amount massively reduces the take-up and impact of services such as health and education. (This survey by Holla and Kremer summarises the evidence.)  So charges excludes many people from access, and it seems likely that the poorest and most vulnerable will be excluded most of all.

On the other hand, we know that public services in developing countries are often poorly managed and badly delivered. That’s why, as Tim points out in his FT article, many of the very poorest people choose to go private instead.

Apologies if this is anecdotal, but I see this dilemma in practice every day. My partner works for Marie Stopes International, which operates 21 clinics for women (providing contraception and abortion) here in Ethiopia.  They charge their clients for services – a small amount which is just enough to pay for the cost of running the clinics.   The result is that they are very focused on delivering services that will bring their clients into the clinics every day – that is, services that they actually need, at a price they can afford.  My feeling is that, as a result, they are more focused on their customers than most public services in developing countries, and indeed in some developed countries, whether financed by aid or by taxation.

So how can we disentagle ourselves from the horns of this dilemma?  Here are three thoughts:

• First, we should take seriously Tim’s observation that “a little accountability goes a long way” and think  much harder about how we can make public services more acountable.  You have probably heard about the way more funding reached Ugandan schools as a result of greater transparency (though the details have been disputed (pdf)). The work of my team on aid transparency is a modest contribution to this effort.
   
• Second, we should not be ideological about whether the public or private sector actually provides services, as long as the government takes steps to ensure that there is universal access. For example, governments (with the support of donors) might issue vouchers to the poorest, enabling them to choose for themselves whether to use public or private services.
   
• Third, in the long run this problem will be reduced if and when there is equitably shared economic growth which gives people sufficient incomes for these kinds of choices to be more reasonable.

Edinburgh is to become the first British university to help make cheap medicines available to the developing world by licensing research to pharmaceutical companies only on condition that poorer communities get life-saving drugs at cost price.

That’s great. Differential pricing is good for everyone. (Here’s why).

On Development Drums this week, we heard about the impact of the global gag rule on women in Africa, in an interview with Dana Hovig from Marie Stopes International. (Full disclosure: my partner works for MSI.)  My expert guests were sceptical that Barack Obama would give priority to reversing the global gag rule any time soon.

But this weekend, we have heard that Obama is preparing to reverse some key decisions that President Bush took using executive authority, including on stem cell research, oil and gas drilling and – according to the Washington Post, the New York Times and Bloomberg – the global gag rule:

President-elect Barack Obama will reverse U.S. family-planning and AIDS-prevention strategies that have long linked global funding to anti-abortion and abstinence education, a public-health adviser said. Obama “is committed to looking at all this and changing the policies so that family-planning services — both in the U.S. and the developing world — reflect what works, what helps prevent unintended pregnancy, reduce maternal and infant mortality, prevent the spread of disease,” Wood said.

These seems like a good time to raise the profile of this important issue, to make sure that reversing the global gag rule is on the list of decisions for President Obama to take in his first day in office.  The Center for Reproductive Rights has written to Barack Obama calling for the repeal of the global gag rule.  Now is the time to make as much noise as possible about this to generate political support for an early decision to reverse this policy.

For more information about the global gag rule, listen to the interview with Dana Hovig in Episode 6 of Development Drums (about 30 minutes in to the podcast).

when you make a donation to Planned Parenthood in her name, they’ll send her a card telling her that the donation has been made in her honor. Here’s the link to the Planned Parenthood website:

https://secure.ga0.org/02/pp10000_inhonor

You’ll need to fill in the address to let PP know where to send the “in Sarah Palin’s honor” card. I suggest you use the address for the McCain campaign headquarters, which is:

McCain for President
1235 S. Clark Street
1st Floor
Arlington , VA 22202

PS make sure you use that link above or choose the pulldown of Donate–Honorary or Memorial Donations, not the regular “Donate Online”

The Health Impact Fund, our flagship proposal, is a new way of stimulating research and development of life-saving pharmaceuticals. To provide wide access, medicines need to be affordable-but low prices don’t create strong incentives for innovators to invest in research and development. The Health Impact Fund is an optional mechanism that offers pharmaceutical innovators a supplementary reward based on the health impact of their products, if they agree to sell those products at cost. The proposed Fund is to be financed mainly by governments.

I personally find this idea attractive. It shares a lot of characteristics and thinking with the Advance Market Commitment idea that I have worked on in the past. The main difference is that the AMC leaves patents in place; under the IGH they are signed away. If the pharmaceutical industry is willing to participate, this would be very attractive; my guess is that many firms will find this too challenging to their existing business model.

The Welbodi Partnership was established to support the provision of paediatric care in Sierra Leone, where child health statistics are the worst in the world.

The cool thing – as Tristan points out – is that:

they work directly with the Ministry of Health and Sanitation to improve the hospital, instead of running their own hospital, as many NGOs like to do. This way, they deliver services and build capacity in the country’s health system.

There are far too many NGOs who, for respectable reasons, set up parallel services. The result is duplication and waste, and foreign-funded NGOs often deplete capacity from already hard-pressed government systems. The Welbody partnership approach seems to combine the best of both worlds.

Does anyone know of other NGOs taking this approach?

… across much of the less developed world, fistula is an ordinary hazard of childbirth for many women and a permanent blight on countless lives. In those countries, obstetric fistula overwhelming results from obstructed labor, which occurs when the baby cannot pass through the mother’s birth canal because it either does not come head first or is too large for her pelvis. In the developed world, prompt medical intervention, often including Caesarean section, permits a delivery safe for both mother and child. But thousands of times each year in poor countries, birthing women receive no such aid and their labor is a futile agony lasting up to five days, with uterine contractions constantly forcing the baby, usually head first, against unyielding pelvic bone.

Long before the mother’s torment ends, however, the unremitting pressure kills the child. It also cuts off the blood supply to the soft tissues of her vagina and other organs trapped between the baby’s skull and her pelvis. Eventually these tissues also die, forming one or more fistulas, and the baby’s head softens sufficiently for the stillborn child to pass from her body. Should she survive, the mother soon finds urine, feces or both leaking unstoppably from her vagina. In about a fifth of cases, the woman also suffers nerve injury that can cause a condition called footdrop, which prevents normal walking. Constant contact with urine or feces irritates and infects her skin and other tissues. Her kidneys, bladder, or other nearby organs may also be damaged. Her menstrual periods may stop, rendering her infertile.

The stark difference between the experience of mothers in the developing and developed worlds explains one of the greatest discrepancies known in health statistics, that between the rates of maternal mortality in rich and poor countries—a gap that constitutes “one of the most neglected issues of social injustice in the world today,” according to Wall and co-authors.17 Only 1 percent of the more than half a million maternal deaths each year happen in developed nations. In Northern Europe and North America, 11 women die for every 100,000 live births and a woman’s lifetime chance of dying because of pregnancy is 1 in 4,000. In Africa, that risk has been estimated at 1 in 14,18 and in some of the poorest parts of the continent, where over a thousand women die for every 100,000 live births, at 1 in 7.19

… A number of facilities, most prominently the renowned Addis Ababa Fistula Hospital, in Ethiopia, repair thousands of fistulas each year at a cost of about $450 for each operation and related care.²⁶ But still, the number of women suffering the disability and indignity continues to grow, creating a backlog that by some estimates would take centuries to clear, but which others believe could, with appropriate effort, be managed in a decade. And given the limited funds available for maternal care overall, experts differ on how to balance resources between prevention and treatment. In the opinion of Dr. Yifru Berhan, an obstetrician in the Ethiopian town of Hawassa, for example, “it’s unfortunate that we have hospitals to manage the complication but not to prevent the complication.”²⁷

(Declaration of interest: my partner works for Marie Stopes International, whose slogan is “Children by choice, not by chance”. Their work to provide women with access to sexual health services including contraception and abortion, enables women to choose when and whether they want to have children, enabling them to avoid pregnancy when they are very young, to avoid having too many children and to increase the spacing between children, all of which are important ways to prevent this kind of complication from pregnancy and childbirth.)

We went recently to the village of Amber, about 6 hours north of Addis Ababa, to spend some time listening to people telling us about their attitudes to children, marriage, divorce, sex, abortion and contraceptions. (This is part of G’s work; I went along to listen and learn.)

The most surprising thing to me was that, although this is a deeply religious society, there were no social, religious or other concerns about people using contraception and abortion to limit the size of their family. The concern that people have about the pressure on land of having too many children in the community was far more pressing. The only objections to contraception were (perceived and real) side effects and the practicalities (and cost) of getting it.

More photos here.

Africa needs stronger health systems, to be sure, but can we build those systems with our immigration policy? There is no scientific evidence that this has happened anywhere, or is possible anywhere. We should be very hesitant to force real people with real families to accept wages that we would never accept, without overwhelming and indisputable proof that by itself this blunt act does enormous good.

“That’s increasingly in the last few years what our foundation has been focused on – what is the most cost-effective way to mobilise a national health system,” Mr Clinton said.

“You can get the universal treatment – the money’s there now, if we spend it most effectively.”

“But we don’t have the health care systems to reach out to people, get them tested and diagnosed in a timely fashion, get them on treatment and do the regular follow-ups.”

Well good. This is what the aid experts have been saying for years. It is why many of us opposed the establishment of funds like the Global Fund for AIDS, TB and Malaria and PEPFAR in the first place. But politicians like to announce things that they think their public will understand, and big disease-specific initiatives are the kind of thing that seems to fit the bill.

Leaders of the Group of Eight rich nations are set to backtrack on their landmark pledge at the Gleneagles summit in 2005 to increase development aid to Africa to $25bn a year. A draft communiqué obtained by the Financial Times, due to be issued at the group’s July summit in Hokkaido, Japan, shows leaders will commit to fulfilling “our commitments on [development aid] made at Gleneagles” – but fails to cite the target of $25bn annually by 2010.

To be fair, the only evidence for this given by the FT is that the draft G8 summit makes no reference to the figure. In some ways this may seem pedantic – failing to repeat the number is not the sane thing as renouncing it – but for those of us who watch summit language carefully, this is a significant ommission. If the countries meant to to keep their promises, they would make a virtue of it by restating the commitment. The only possible reason for dropping the language is that they no longer believe they will live up to it.

In some ways, however, this is more worrying:

In a further retreat, the G8 is set to abandon its Gleneagles promise to provide universal access to Aids treatment and prevention by 2010. The pledge has been a benchmark around which health campaigners and others have been organising their work, especially in Africa.

Universal access to AIDS treatment is a much better target than the aid target. In principle, we should be setting targets for what we plan to achieve, not targets for how much we plan to spend (which creates perverse incentives to spend more, rather than achieve more value for money).

Unpredictable demand creates a three-way catch-22 problem, as pointed out in a 2002 study commissioned by the GAVI Alliance, formerly the Global Alliance for Vaccines and Immunization. Poor countries have to know the price of a vaccine to see if they can afford it. Manufacturers, however, are hesitant to set a price unless they know how many doses will be bought. And aid donors cannot be sure they can subsidize a purchase without knowing the price and quantity of the sale. Vaccine purchases have occurred anyway, but not without difficulty. In 2002, when GAVI convinced suppliers to manufacture extra courses of an existing vaccine against Haemophilus influenzae type b, poor countries were slow to buy it. "We were very naive at that time and thought countries would take up the vaccine much faster than they did," recalls Michel Zaffran, the group's deputy executive secretary. "The tools that we had available were very poor."

I am not personally convinced that the problem is forecasting demand in the sense of uncertainty about how many doses of vaccine we are likely to need. In principle, the number of children in a cohort, the extent to which they are at risk of particular diseases, and the the capacity of health services to reach them with vaccines, are all likely to vary little from one year to another. 

The big driver of uncertainty in demand seems to be the behaviour of donors, capriciously moving money from one priority to another according to the latest political priority or development fad, or unpredictably dumping their unspent budget at the end of the year on easy-to-buy goods such as pharmaceutical companies.  As well as improving our techniques for forecasting demand, we need to take a long hard look at how we can make aid budgets more predictable, so that developing countries have much more information with which to plan, long in advance, how many drugs and vaccines they will be able to afford.

Few of the newly funded global health projects, meanwhile, have built-in methods of assessing their efficacy or sustainability. Fewer still have ever scaled up beyond initial pilot stages. And nearly all have been designed, managed, and executed by residents of the wealthy world (albeit in cooperation with local personnel and agencies). Many of the most successful programs are executed by foreign NGOs and academic groups, operating with almost no government interference inside weak or failed states. Virtually no provisions exist to allow the world's poor to say what they want, decide which projects serve their needs, or adopt local innovations. And nearly all programs lack exit strategies or safeguards against the dependency of local governments.

The analysis emphasizes the difficulties caused by relentless focus on individual diseases (AIDS, malaria etc) and not enough on investment in the underlying health systems that are needed to deliver treatments and provide health care services to men and women in poor countries:

Which outcome will emerge depends on whether it is possible to expand the developing world's local talent pool of health workers, restore and improve crumbling national and global health infrastructures, and devise effective local and international systems for disease prevention and treatment.

According to the World Bank, while investment in disease-specific programmes (such as the Global Fund) have increased sharply in recent years, investment in health systems has fallen by 50%.

In this context, the Scaling Up for Better Health initiative (see pdf) is a very high priority.

That's why we have to do better this time, learning from history that to succeed will require big-time funding over the long haul, and a willingness to pay attention to emerging evidence about which combination of strategies is working or failing in different settings. In the past, the bugs have adapted faster than we have, costing untold lives. Much as we might see potential in the use of bednets, the application of pesticides, the scale-up of ACT use or other strategies, an over-reliance on one approach versus others combined with unrealistic promises about very rapid progress is likely to lead us down the road to nowhere that others have followed before.

Ruth's warning applies to much of the development business.  There are few quick wins; we need long term sustained commitment, not attractive initiatives; and we we need to act on evidence not on instinct.